While waving in general is a good thing, foregoing is not. This is especially true when it comes to certain contingencies when preparing an offer for a home. In a desperate effort to win an offer in a highly competitive market, we see too many offers that neglect due diligence and / or financial and valuation risks and could potentially cost a buyer thousands of dollars in the end.
In the real estate world, a contingency refers to a condition in the real estate purchase agreement that must be met in order for the transaction to move forward towards completion. Aside from the fact that buying a home is contingent on the sale of a buyer’s home, which we’ll skip in a moment as there are so few offers that would be accepted in this market with this contingency, one of the next contingencies to be built in in Utah is the real estate purchase agreement the “due diligence” contingency. This is one of the most important. Even in this market it doesn’t make sense to skip this step, and it doesn’t seem to make tax sense either (this is where the hate mail comes in).
As a reminder, owning a home is one of the biggest financial decisions a person makes in their life. In most cases, the home is a person’s greatest asset. It deserves at least the same, if not more, time inspecting it than it would take to buy a car. But so many are willing to forego it in order to win an offer.
The duty of care includes tests. An experienced, well-respected home inspector checks all systems inside and out of the home; from the doorbell to the stove and everything in between inside and from the slope to the roof outside. Inspections can also include tests for mold, meth, radon, and pests. These tests might not find a rattlesnake in the backyard (ours didn’t), but they could find a termite problem – yes, even in Utah. Buyer’s remorse is real and occurs most often when inspections have been omitted and all of the cash in the deal has been used to pay the difference between the appraisal and the purchase price. It’s just not worth it.
A clear title report should also be a non-negotiable contingency. This is built into the contract. It shouldn’t be written out. Even if you are buying a home from another family member (especially if you are buying a home from another family member), a full title search should be done and insurance from a title company to ensure the home has a clear title for transfer ; Otherwise, the buyer could buy something that doesn’t even belong to the seller. In most cases, this is also required for financing from a lender, but it should also be mandatory for cash payments.
At least these two eventualities should not be dispensed with. As brokers who adhere to a code of ethics in which we undertake to protect the interests of our customers, we should not advise our customers to forego inspections. This is never in your best interests. While a quote can be written in one language to reassure the seller that the buyer is not asking for repairs, it should still allow inspections to occur. Let the old school dye me, but getting discouraged from it is ruthless.
So don’t hesitate to wave for any purpose, but think twice before foregoing it … because it can just be your money’s goodbye.
Jen Fischer is an associate broker and realtor. She can be reached at 801-645-2134 or firstname.lastname@example.org.